There is nothing like a good old-fashioned political scrum to get the juices flowing. Sometime in late February 2015 the FCC will issue it’s Order dealing with the  “The Open Internet”, which would prohibit  Internet Service Providers (ISP) from blocking, slowing  down or speeding  up Internet service (throttling) and paid prioritization depending upon the relationship of the  ISP to the person whose information is being transmitted.

FCC

These regulations come after years of litigation and after  3.5 million  comments by interested parties to the FCC proposed new rules to replace the rules that were declared invalid by the U. S. Court of Appeals for the D. C. Circuit.   The fact that  3.5 million comments were generated on this subject is an indication of the importance  of  the Internet to the public.  Free and open access to the Internet is critical to economic development and  well-informed citizens.  This is big stuff because the  Internet ranks as  one of the most important innovations since the development of the printing press.

The “Open Internet”   is described  by the FCC as  “…the Internet as we know it. It’s open because it uses free,     publicly available standards that anyone can access and build to, and it treats all traffic that flows across the network in roughly the same way.” “Under this principle, consumers can make their own choices about what applications and services to use and are free to decide what lawful content they want to access, create, or share with others. This openness promotes competition and enables investment and innovation.”

Before diving into the issues it is useful to review  some  history,  described in  a post  by Public Knowledge setting the stage for the issuance of rules by the FCC at the end of February 2015.  Additional background may be found on my earlier Post  “Discrimination on the Internet – Net Neutrality” providing some history concerning how large corporations and in particular AT&T monopolized the telecommunications industry prior to 1984, then after the breakup in 1984  by reconsolidating into large oligopolies described by Professor Wu in his book “The Master Switch.”  My second Post in January 2014 reviews the U. S.  Court of Appeals decision for the D. C. Circuit that invalidated the FCC rule on net  neutrality  from a local government perspective, emphasizing the importance of the last mile of the Internet to the customer’s home or business and the need for local government to encourage the deployment of high-speed Internet access. The President has proposed that the FCC issue rules to preempt state legislation that blocks local government from providing Internet services as a means to introduce competition. With this brief background we are ready to plunge into a discussion of how the battle lines are  drawn with respect to the proposed  Rule that will be issued by the FCC at the end of February 2015.

The President of the United States has weighed in on the side of consumers  in favor of “The Open Internet” to protect consumers from discriminatory practices intended to favor one user over another.  The President’s policy calls on the FCC to prohibit blocking, throttling and paid prioritization so that all customers will be treated the same.

Congressional Republicans  support using existing antitrust laws and a prohibition preempting  the FCC  from “classifying broadband Internet access as a telecommunications service,” in an attempt to  preempt  the FCC from  asserting jurisdiction over the proposed discriminatory practices. Big industry, small industry and all sorts of users  and consumers all be affected by the  upcoming FCC decision,   making it  a significant high point as to  whether or not the American public will get competitive high-speed Internet access that is available to the public at a reasonable cost.

Some of the big interest groups have said that if the FCC issues it’s proposed Order they will engage in  litigation, promising that even after a decade of litigation we will be no farther along than what we are  today. As I said it sounds like a full-scale scrum,  embodied in scorched earth warfare in the form of litigation, lobbying and politics.

What are the  competing policy issues that are under consideration? –   Interestingly what was an extremely complicated subject has gotten down to a few basic principles that are relatively easy to understand. There are two basic narratives.  

One narrative proposed by the President and apparently the FCC,  is a  policy that would prohibit blocking of consumers access to a website or service. In addition, there is no  throttling, which would allow an ISP to intentionally slow down some  or speed up content, nor could there be paid prioritization. Third, there is a requirement of increased transparency between consumers and the ISP  that would allow the FCC to make for use of its transparency authority to all points of interconnection between the ISP and the rest of the Internet.

Under this proposal everyone – not just those commercially affiliated with an ISP – gets a fair shot at your business. No one would be stuck in a slow lane because they did not pay a fee thereby providing a level playing field essential to the Internet’s growth.  This would allow the big and the small players to compete on a level playing field. The above rules basically reflect the way people use the Internet today,  as a means on a mobile device. applying these rules to mobile broadband.

The counter narrative, proposed by the Republicans is to preempt the authority of the FCC to establish rules that apply to mobile broadband thereby essentially tying the hands of the FCC to a do-nothing role in trying to sort out how to deal with blocking,  throttling and paid prioritization.

Certainly the politicians, big business and their lobbyist will try to make the above  narratives  much more complicated with lots of if, ands and  buts in order to bamboozle the public; nevertheless the narrative remains the same.

So how do citizens and  local government officials  sort these issues out? It is not easy when facing political rhetoric on all sides of an issue. In these situations, it is advisable  to take stock of certain principles that can assist in making your own determination. Below are some of the core principles  that may help guide you and local government officials in  understanding the public policy issues that are at stake.

Failure of existing policy – When it comes to the Internet the United States lags well behind many other modern economies and is  way down the list in providing high-speed Internet and Internet access to the public at a much higher cost.  See discussion in  The New York Times explaining why the U. S. has fallen behind in Internet speed and affordability.   There is really no serious debate about the failure of the United States with respect to how far it lags behind in providing high-speed Internet access and access to the public.

When a policy has failed as miserably as our Internet policy to deliver what is unquestionably one the most important service in a modern economy it is time to take a deep hard look at changing the status quo. Local government officials and citizens need to ask if their community can compete with communities like Kansas City which has lightning speed (1000 GB per second) if their community only has an Internet speed of less than 25 megabytes a second. The FCC has just proposed new broadband benchmarks that establish download speeds of  25 MB per second and upload speeds of 4 MB a second. Since our economy is moving towards an information-based economy every community leader needs to address the question of whether or not high-speed Internet is an important economic indicator of the viability of a local economy. See Community – Based Broadband Solutions.

History –  There is a long  history with respect to the use of transportation pricing  to thwart competition going back to the John D Rockefeller,  Standard Oil Trust, which used the railroads (the transportation system) for products and material particularly related to the  developing oil industry in Pennsylvania. Rockefeller was able to secretly agree with the railroad industry to allow his products to be transported  at less cost than his competitors. Rockefeller quickly moved in on  his weakened  competitors to buy them up and create one of the great monopolies  of all time, the  Standard Oil  Trust.  In telecommunications, AT&T adopted a different strategy to monopolize  basically the entire telephone industry by  adopting the public utility model to thwart competition, which worked until 1984.  

Most everyone recognizes that if ISPs can block, throttle or get paid for prioritization  of services that they can pick winners and losers in the marketplace, thereby exploiting the marketplace through anti-competitive activities.    While there is a long history of antitrust activities in the telephone industry and other industries where power is consolidated into one or several large companies until recently there has not been any significant modern-day  analysis to document how this works in a 21st century  economy  with respect to telecommunications until the recent work by Gene Tirole. His work garnered him a Nobel Prize in Economics for showing how government can better regulate industries from banking and  telecommunications.  His work will give a significant advantage to those who support the principles of the free market by  prohibiting  blocking,  throttling or prioritization  of content.

Terminology –      I have always had  a problem with the use of the catchy term  “Net Neutrality “coined by Professor Wu to describe the principles of the Internet as open to everyone on the same terms.  The use of this term is extremely unfortunate in that it fails to capture the essence of what is at stake because   the average citizen does not know what the term  “net neutrality”   means thereby  requiring  an immediate need  for further explanation. The term could be: “No Discrimination on the Internet between Providers” or maybe a slightly longer version    like: “The FCC should adopt rules that  are nondiscriminatory by prohibiting blocking,  throttling and paid prioritization.”   I am sure there are other versions but I know the term “net neutrality” doesn’t get the job done.  If properly articulated it is  difficult to argue against the principle of nondiscrimination.  It is hard to believe  anyone can stand up and say “I favor blocking”, “I am for throttling and allowing  content to be slowed down or speeded it up” and  “ISPs  can  be  paid  for prioritization of content.”   

At the center of this debate is the American public who wakes up every day to use the Internet in one  of many ways. The American public should not allow the big companies to write the rules to their advantage over the  public interest, which is to maintain an open and free Internet that does not allow blocking,  throttling of speed nor paid prioritization.   The FCC should continue to have jurisdiction over this matter as currently provided for by law.  Nevertheless, it must be realized that  the opponents of FCC regulation are quickly shifting their position  on a day-to-day basis  to avoid the FCC from issuing its proposed rule at the end of February 2015. Stay tuned.

Howard  Wright  © 2015